Income spread evens out a bit

Income distribution in Australia has become slightly more even in the wake of the global financial crisis, but the richest fifth of households still own 61 per cent of Australia's household wealth.

A Bureau of Statistics survey of more than 14,000 households reports that despite Australia's national income soaring as mineral prices rose, little of this percolated down to households.

Average real after-tax income per head rose just 1.2 per cent in the four years to 2011-12 - a sharp contrast to growth of 27.7 per cent over the previous four years.

High income earners took the worst of it. Their investment income soared in what Reserve Bank governor Glenn Stevens calls ''the credit boom'' from 1997 to 2008, then sank in the bust.

Their average after-tax incomes rose 36 per cent in the four years to 2007-08, then fell 2 per cent over the next four years.

Those in the poorest 20 per cent of households - mostly people on pensions or welfare - did best in the four years to 2011-12, their disposable incomes rising by 5 per cent. Yet that was far below the 16 per cent rise in the previous four years.

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The growth in national income did not flow on to households because mining companies used the windfall from record prices to fund the biggest investment boom Australia has ever seen. That will bring long-term benefits, but they have not come yet. The bureau's bottom line is that the Gini coefficient of income inequality has declined by 5 per cent since the GFC. But between 1997 and 2008, inequality increased by 15 per cent. Two-thirds of that is still there.

In the four years to 2008, the top 20 per cent of households got 50 per cent of all the increase in household income. The bottom 20 per cent got just 5 per cent.

Wealth is far more unevenly distributed. In 2011-12, the bureau estimates, the wealthiest 20 per cent of households owned 61 per cent of all household wealth, up from 59 per cent in 2003-04. On average, the top 20 per cent owned $2.2 million of assets each.

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The wealthiest 10 per cent of households alone own 44 per cent of all Australia's household wealth - almost as much as the other 90 per cent.

The poorest 20 per cent of households, by contrast, own just 1 per cent of all household wealth, a mere $31,200 each. Almost all are renting, and almost half of them live on pensions or other benefits.

But the bottom 20 per cent for wealth are not the same people as the bottom 20 per cent on income. Many have low incomes but substantial assets: indeed, one in 20 of those in the bottom 10 per cent on income are in the top 10 per cent for wealth.

The bureau highlights the huge impact of government in reducing inequality by pensions, benefits and free services.